It’s been more than a year since my last blogpost… as I already knew back then – working in a startup, especially in its early days, is too much work to allow yourself to blog more than once a year

However, there are some important insights, based on my experience in Imagga, that I believe are important to share with anyone who is planning to start or has already started a startup… and I couldn’t wait more to share the idea that has been in my head for so long. Here it is:

If you’ve ever been involved in a startup, or at least if you’ve attended a startup pitch, there is always a question like this: “How will you beat or prevent Google/Facebook/Dropbox/whomever… doing the same thing“. Then the founders are either confused and/or answer something cocky like “they are too slow” or “we have a great vision that they lack“.

While these are not necessarily untrue, it often sounds too vague.

However, I think we can prove, even mathematically, that it’s possible to beat those “Goliaths”. Let’s see the actual components of the formula proving this:

Dedication matters: 24h * 7d / w is way bigger than 8h * 5d / w. It’s actually more than 4 times bigger! And what this practically means… It means that you don’t have hobbies, other than your startup – it’s naturally both your day job and your hobby. When you go to bed you go asleep thinking about it, when you wake up – it’s the first thing you think about, right before jumping out of bed, excited to execute your ideas. You don’t have a real social live as well… No other than occasionally visiting a startup event or two, only if you don’t have something urgent to finish (and you always do). If you hear someone telling you that he runs a startup and has an active social life it means one of two things – she is either a blow-hard startup wannabe showing-off around as the new kid in the block, or there is an imbalance in the team, and someone else probably has to have neither social, nor family life to compensate this.

Resourcefulness matters: the famous Pareto principle - 80% of the effects come from 20% of the causes. What this practically means for you? As a startup you always start with insignificant amount of any resource you may think of (money, people, network, leverage, whatever…) compared to the big guys. And this is one of the best and most romantic and revolutionary things about startups – you must be extremely resourceful! And Pareto is on your side here – with five times less resources you can still achieve 80% of the result, of course only if you are smart/intuitive/customer-oriented enough to figure out exactly which 20% to go after. And this is another factor of 4 for our formula!

Passion and commitment matter: This is what actually nurture dedication and resourcefulness. And this is where the real magic happens – someone will call you unexpectedly exactly when you feel most desperate about what’s next, some new idea how to fix a long lasting issue will come to your head, your intuition will help you to identify what is the best thing to do among plethora of possible dead-ends… And these are what other people also feel and what makes them much more likely to help you – “if those guys are giving their best to achieve what they are aiming to do – I’m much more confident that my help/time/money won’t go wasted” they think. This alone can enormously increase your chances to succeed, but let’s approximate it with just a conservative factor of 2.

So let’s see, 4 * 4 * 2 = 32. Now you have a multiple of 32, which means that a dedicated, resourceful, passionate and committed team of 6 can be on par with team of 200 who are not that passionate about their job any more, and are not “hungry” (“stay hungry, stay foolish“, you know…) enough to be resourceful. And this is more than enough to beat almost anything. Yes… Google may work on something that you do, but it’s not all 46 421 people out of it, it’s just a team of 20 somewhere in a lab

Cheers! (And shivers!)

Bonus note: as we are on the maths topic today, I’ll borrow an important math lesson from Lyuben, who is a big fan (sometimes way too big fan) of numbers:

Think of the valuation you want to achieve for your startup and subtract your current valuation out of it. Then divide it by the number of days you think will be needed to achieve your goal. For example:

$ 1 367 123.28 / 6 = $227 853.88 is the expected value creation per man per day in a startup aiming to go north of a billion in two years after its seed round

Now it’s up to you to decide do you want to waste that day in showing-off or ranting in the social networks, reading and being jealous or daydreaming of others success in the media, or shmoozing like a conference ho. Or… you better be giving the best out of you in creating that value you’ve promised your investors, your team, and yourself? It’s up to YOU!

A few days ago Todor Breshkov, managing partner at LAUNCHub, asked me to share with a friend what it is about and how it feels to be a LAUNCHub scout. So I decided it’s a good idea to formulate my answer as a blog post .

First things first, I’ll start (and finish) by answering a deeply related question – why did I join the team as a scout?

As with most of the valuable things in life – depending on your perspective – you either don’t have a simple answer, or you have a very simple universal answer – love.

And for love you don’t need a rational explanation… But still, I’ll try to rationalize it :

After the first LAUNCHub Long Weekend in the mid of July I literally fell in love with those guys – no arrogance, no smart asses, approachable, with strong common sense, and last but not least – passionate about what they do and truly willing to help the startups give their best shot. And the way we could communicate directly and openly with each other was a really cool thing (I quite prefer being open and direct, without being (too) rude). In these people I really recognize the potential to do the things the way I believe things should be done in a startup world.

The second reason – helping LAUNCHub with screening startup ideas, giving feedback and sharing ideas on improving the internal processes, educational programs, and events is one of the most effective ways for me to “give back” to the community.

By “giving back” I mean not only sharing my experience as a startup founder in a place like Bulgaria, and trying to help the startups with their presentation and communication skills… But also being involved in the process of building the ecosystem and the mentality here – via keeping a close relation with the LAUNCHub guys, who actually have the tools (read – money, expertize, and passion) to make a difference, right now.

I really believe that giving back is very important if you want to achieve a sustainable success, and also, quite importantly – to develop yourself as a person. And with LAUNCHub I have the chance to do so. (Being an assistant professor in Technology Entrepreneurship in Sofia University is the other way I’m trying to help to the community, but the effect of my efforts there is still quite indirect and more oriented to mid-long term.)

The third reason is recognition. “Scout” sounds sexy! ( They offered me “entrepreneur in residence” and I declined ). Now seriously… From what you just read – it should be already clear that for me it’s an honor to be at least a tiny part of this team. That way also being a part of the first major move ever happening in the Bulgarian venture capital realm.

And one last thing. Getting the recognition and having the chance to interfere with startups is a privilege… that comes along with a great responsibility. So I use this as a chance to push myself to stick with high standards… and to practice what I preach. And believe me – it’s not an easy job .

I’d like to start this blog with a practical explanation why the importance of focus is not just a myth.

Todor Sarakchiev and I were able to somehow articulate this during one of our joint lectures in Sofia University. A week before the class we asked the students to analyze what could be considered as critical success factors, differentiating now super-successful ventures like Facebook, Square, Instagram (recently acquired by Facebook) and a few more, from their competitors at the time they all have been just start-ups.

Among others, one of the most common facts turned out to be that they’ve focused, eventually after a few pivots, on executing something very sharply and thus gaining the market leader position, even if the particular market may have been quite small at that initial moment.

Here is a kind of “algorithm” for world domination, where the right focus is the foundation for success:

Disclaimer: First, we must admit that the right environment for the particular idea should be there. And it all starts with the visionary opportunity recognition.

Then comes the most tricky part – to focus on something particular. There is a plethora of sub-opportunities to take. And in this initial moment it’s not as obvious which is the best one, as it is post factum, after you are already quite successful… or have failed. However, focus grants at least two very valuable ingredients for your eventual success, as explained in the next bullet.

Effective execution and clarity. The less things you do, the faster their execution. Also think about it that way – the less features your product has, the easier it is for your users to perceive it and the lower the barrier for them to jump in.

Having something delivered fast, and with sharp feature set (think MVP) allows you to do something very very important – to iterate. This topic is very well covered, including in books like Steve Blank’s Four Steps to Epiphany and Eric Ries’ Lean Startup. The important thing in the context of this blog post is that focus is the foundation that allows effective execution, and effective execution allows for iterations and pivoting if(when) needed. Another important thing about iteration is that it naturally forces you to overcome two big problems – arrogance, that makes you think you know better than your customers what they actually want, and lack of self-esteem, that makes you feel your product is never good enough. Strangely or not, but those two are not uncommon and a very deadly combo for a lot of early stage start-ups.

Great product (no matter how big or small) that customers actually want is where you want to be after several iterations, and this is almost for granted if you’ve done things right so far.

It’s much easier to leverage a great product, compared to short-sighted modest one, to world domination. It would either be viral, or have high net-promoter rate.

From then on you either scale organically or it’s much easier to acquire the outside resources needed to do so (read VC funding). Of course your idea should be scalable, or more precisely said, you should have already pivoted to the scalable idea.

That’s it. Keep it in mind the next time you want to dilute your focus with too many things. Someone will always be faster than you if she focus on a single thing. Of course, synergy between products or features may brake this rule, but you better think of it like an exception or as a part of your strategy at a later stage.

UPDATE Aug 14, 2012:Tom Tunguz has just posted about going mobile first and a substantial part of his motivation to proclaim so is the shorter time to build a MVP for a mobile because of the naturally limited feature set there